During the Chinese New Year, alumina transactions were sluggish, and prices are expected to continue their downward trend

Futures Market: Before the holiday, the most-traded alumina 2505 futures contract opened at RMB 3,586 per tonne, reached a high of RMB 3,628 per tonne, a low of RMB 3,570 per tonne, and closed at RMB 3,606 per tonne, up RMB 20 per tonne or 0.56 per cent. Open interest was 95,800 lots, down 2,105 lots.

Industry Dynamics:

1. According to SMM statistics, as of January 27, domestic aluminium ingot inventory in major consumption areas stood at 492,000 tonnes, up 32,000 tonnes W-o-W; aluminium billet inventory in major consumption areas was 222,800 tonnes, up 22,800 tonnes from last Thursday.
2. SMM data shows that in January 2025, the average tax-inclusive full cost of China's aluminium industry was RMB 19,989 per tonne, down 5.3 per cent MoM but up 27 per cent Y-o-Y, mainly due to the sharp pullback in spot alumina prices during the period.
3. On January 24, 30,000 mt of alumina was traded overseas at a transaction price of USD 540 per tonne FOB Bunbury, Western Australia, for March shipment.

Warehouse Warrant Daily Report: On January 27, the total registered warehouse warrants for alumina decreased by 4,195 tonnes from the previous trading day to 28,200 tonnes. In Shandong, the total registered warehouse warrants for alumina increased by 1,509 tonnes to 2,410 tonnes; in Henan, they decreased by 3,301 tonnes to 8,702 tonnes; in Guangxi and Gansu, they remained unchanged at 0 tonne; in Xinjiang, they decreased by 2,403 tonnes to 1.71 tonnes.

Overseas Market: As of January 27, the FOB Western Australia alumina price was USD 540 per tonne, with an ocean freight rate of USD 19.95 per tonne. The USD/CNY exchange rate sell price was around 7.29, translating to an external selling price of approximately RMB 4,692 per tonne at major domestic ports, which is RMB 823 per tonne higher than domestic alumina prices. The alumina import window remains closed.

Summary: Recently, the weekly operating rate of alumina has continued to fluctuate at highs, and no significant reduction in alumina supply has been observed. During the Chinese New Year, spot alumina transactions were relatively sluggish, with cost support evident. In North China, the decline in spot alumina transaction prices has significantly narrowed, with current transaction prices approaching the theoretical marginal cost of alumina production in the region. In South China, spot alumina prices have accelerated their decline, and the price difference between North and South China narrowed during the week. However, bauxite suppliers have lowered their quotations, and alumina cost support is expected to shift downward in the future. In the short term, no large-scale expectations for production cuts in alumina have been identified, and the spot alumina market is expected to remain relatively ample. Prices are expected to maintain a downward trend in the short term.

Source: SMM